Rajesh Pukhraj Raka, Bhusawal V. ACIT, Range-2, Jalgaon

ITA 438/PUN/2013

• Counselvise Citation: 43824514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 15-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.438/PN/2013 (A.Y: 2005-06) RAJESH PUKHRAJ RAKA PROP. RAKA CONSTRUCTION, GANDHI CHOWK, BHUSAWAL 425201 PAN: ADMPR4741E APPELLANT VS. ADDL. CIT, RANGE-2, JALGAON RESPONDENT APPELLANT BY : SHRI SHARAD SHAH RESPONDENT BY : SHRI S.P . WALIMBE DATE OF HEARING: 13.03.2014 DATE OF ORDER : 20.03.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-II, [IN SHOR T CIT(A)] NASHIK, DATED 10.12.2012 FOR A.Y. 2005-06 ON THE FO LLOWING GROUNDS. 1. THE LEARNED CIT (A) ERRED IN NOT FOLLOWING THE HON. ITAT ORDER DATED 18.07.2012 IN THE LETTER AND SPIRIT. 2. THE LEARNED CIT (A) ERRED IN EXCEEDING THE DIRECTIO N OF THE HON. ITAT TO FIND OUT AS TO WHETHER ANY STATEM ENT OF TWO CREDITORS WAS ON THE ASSESSMENT RECORD OR NO T. INSTEAD OF FACT FINDING, HE ALLOWED AO TO EXAMINE C REDITORS. 3. THE LEARNED CIT (A) ERRED IN RELYING ON A STATEMENT RECORDED BY THE ASSESSING OFFICER SUBSEQUENT TO ITA T ORDER WHEN THE DIRECTION OF ITAT IS ONLY TO FIND OUT WHET HER THERE IS ANY STATEMENT ON RECORD. 2 4. THE CIT (A) ERRED IN RELYING ON FRESH EVIDENCES (SUBSEQUENTLY RECORDED STATEMENTS) WITHOUT GIVING A NY OPPORTUNITY EITHER TO ASSESSEE FOR CROSS EXAMINATIO N OR TO THE ASSESSEE AS TO WHY HE HAS RELIED ON FRESH EVIDE NCE AND WHETHER THE ASSESSEE HAS ANY OBJECTION IN THIS REGARD. 5. THE LEARNED CIT (A) ERRED IN CONFIRMING LEVY OF PEN ALTY U/S. 27L(L)(C) ON THE BASIS OF NEW EVIDENCES. 6. THE LEARNED CIT (A) ERRED IN CONFIRMING LEVY OF PEN ALTY U/S. 27L(L)(C) IN RESPECT OF ADDITION IN RESPECT OF 28 LACS ON ACCOUNT OF UNAPPROVED CREDITORS. 7. THE LEARNED CIT-A ERRED IN CONFIRMING LEVY OF PENAL TY THOUGH ASSESSEE AGREED FOR THE ADDITION WITH THE CO NDITION THAT NO PENALTY SHOULD BE LEVIED ON THIS ADDITION. 8. THE LEARNED CIT-A ERRED IN CONFIRMING LEVY OF PENAL TY THOUGH APPELLANT AGREED FOR THE ADDITION OF THE CRE DITORS AMOUNTING TO RS. 28 LACS., NOT BECAUSE THEY WERE NO N GENUINE BUT SINCE THE ASSESSMENT WAS AT THE TIME-BA RRING STAGE AND THE CREDITORS COULD NOT BE PRODUCED. 9. THE LEARNED A.O. ERRED IN NOT ACCEPTING THE INCOME AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE. 10. THE APPELLANT CRAVES ITS RIGHT TO ADD TO OR ALTER T HE GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE COURSE OF HEARING OF THE CASE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND L AND DEVELOPMENT. THE ASSESSEE FILED RETURN OF INCOME F OR THE YEAR UNDER APPEAL ON 31.10.2005 DECLARING TOTAL INCOME O F 12,48,731/-. THERE WAS A SURVEY ACTION U/S.133A OF THE ACT ON 14.03.2006. THE ASSESSEE'S CASE WAS SELECTED FOR SC RUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3). THE ASSESSEE H AD CLAIMED THE DEDUCTION U/S.80IB(10) TO THE EXTENT OF 1,98,052/-. THE SAID DEDUCTION WAS DENIED BY THE ASSESSING OFFICER AND MADE ADDITION TO THE TOTAL INCOME TO THAT EXTENT. THE AS SESSING OFFICER ALSO MADE THE ADDITION OF 28,00,000/- IN RESPECT OF TWO CASH 3 CREDITS APPEARING IN THE BOOKS OF ACCOUNT. THERE WE RE TOTAL SEVEN PARTIES TO WHOM THE SUMMONS WERE ISSUED BY THE ASSE SSING OFFICER U/S.131 OF THE ACT. OUT OF THE SEVEN PARTIE S, FIVE APPEARED BEFORE THE ASSESSING OFFICER. SO FAR AS FOLLOWING T WO PARTIES ARE CONCERNED, THEY COULD NOT APPEAR: 1) S.C. JAIN 18,00,000/- 2) S. K. BAMB 10,00,000/- ------------------- TOTAL 28,00,000/- 3. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U /S. 143(3) OF THE ACT ON 30.11.2007 ON A TOTAL INCOME OF 1,48,34,190/- BY INTER ALIA, MAKING THE ABOVE ADDITIONS OF 28,00,000/- AND 1,98,052/- ON ACCOUNT OF UNPROVED SUNDRY CREDITORS AND DISALLOWANCE OF DEDUCTION U/S.80IB(10) RESPECTIVELY , WHICH WERE CONFIRMED BY CIT(A). CONSEQUENTLY, THE ASSESSING O FFICER INITIATED AND LEVIED PENALTY U/S. 271(L)(C) AMOUNTI NG TO 10,09,145/- ON ACCOUNT OF THE ABOVE MENTIONED ADDIT IONS VIDE ORDER DATED 26.07.2010 WHICH WAS CONTESTED BEFORE T HE CONCERNED CIT(A), WHO VIDE ORDER DATED 12.10.2010 C ONFIRMED THE LEVY OF THE PENALTY U/S.271(L)(C) OF THE ACT. AGGR IEVED BY THE SAME, THE ASSESSEE CARRIED THE MATTER TO 1TAT, PUNE , WHEREIN VIDE ORDER DATED 18.07.2012, THE MATTER WAS RESTORE D ON THE ISSUE OF PENALTY AND ADDITIONS IN RESPECT OF THE TW O CREDITORS AND DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S.80IB(10) TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION AFTER PROVIDING OPPOR TUNITY TO THE ASSESSEE. THE RELEVANT PARA 7 IS REPRODUCED FOR TH E SAKE OF CONVENIENCE AS UNDER: 7. THOUGH WE FIND FORCE IN THE ARGUMENTS OF THE LD COUNSEL AS PER THE RECORD BEFORE US, BUT AT THE SAM E TIME, THE OBSERVATION OF THE LD CIT(A) THAT THE STATEMENT S OF THOSE TWO CREDITORS WERE RECORDED AND BOTH THE CREDITORS DENIED THE CLAIM OF THE ASSESSEE ARE QUITE SERIOUS IN NATU RE. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLEDGE ON 4 BEHALF OF ASSESSEE BEFORE US TO MAKE ANY COMMENT ON THE SAID OBSERVATION OF THE LD CIT(A). IF BOTH THE CRE DITORS HAVE DENIED THE CLAIM OF THE ASSESSEE, THEN IT CAN BE SA ID THAT THERE IS A JUSTIFICATION TO LEVY THE PENALTY, BUT, IF THE FACTS ARE NO SO, THEN THE ISSUE WILL HAVE DIFFERENT CONSE QUENCES. WE, THEREFORE, CONSIDER IT FIT TO RESTORE THE ISSUE OF PENALTY ON THE ADDITION IN RESPECT OF THE TWO CREDITORS TO THE FILE OF THE LD CIT(A) FOR FRESH ADJUDICATION. HE IS DIRECT ED TO VERIFY THE ASSESSMENT RECORDS AND FIND WHETHER IN FACT BOT H THOSE CREDITORS HAVE DENIED THE CLAIM OF THE ASSESSEE. H E SHOULD ALSO CONSIDER THE PLEA OF THE ASSESSEE THAT THE ASS ESSMENT WAS GETTING TIME BARRED AND HENCE, HE COULD NOT PRO DUCE THOSE TWO CREDITORS AND COOPERATED WITH THE A.O FOR COMPLETION OF THE ASSESSMENT WHICH WAS GETTING TIME BARRED. IN OUR OPINION, THE PENALTY IN RESPECT OF THE TWO CREDITS NEEDS RE-CONSIDERATION. 4. AGAIN, IN SET-ASIDE PROCEEDINGS A DETAILED SUBMI SSION WAS MADE BEFORE THE CONCERNED CIT(A), WHEREIN, IT WAS S UBMITTED THAT ITAT HAD RESTORED THE MATTER TO THE FILE OF CIT(A) BECAUSE ITAT, PUNE COULD NOT ASCERTAIN CIT(A)'S OBSERVATION REGAR DING RECORDING OF STATEMENT OF TWO CREDITORS AS CORRECT. A PERUSA L OF RELEVANT RECORDS REVEALS THAT CIT(A)'S OBSERVATION IN REGARD TO RECORDING OF STATEMENTS OF TWO CREDITORS WAS BASED ON ASSESSING OFFICER'S PENALTY ORDER DATED 26.07.2010, WHEREIN IN PARA 3 I T WAS RECORDED AS UNDER: I HAVE CAREFULLY CONSIDERED THE ASSESSEE'S SUBMISS ION AND FOUND THEM NOT ACCEPTABLE. THE ASSESSEE'S CONTENTIO N THAT IT WAS A TIME BARRING CASE AND IN ORDER TO COOPERATE W ITH THE DEPARTMENT, HE AGREED FOR THE DISALLOWANCE OF 28 LACS IS NOT CORRECT. STATEMENT OF BOTH THE CREDITORS WERE R ECORDED, WHEREIN, THEY HAVE DENIED THE AMOUNTS OF CREDITS AP PEARING IN THEN ACCOUNTS. SUCH CONSENT HAS BEEN GIVEN IN WR ITING ONLY WHEN THE DEPARTMENT PROVED IT TO BE NON-GENUIN E.' 5. PURSUANT TO THE DIRECTION OF THE ITAT, PUNE, THE ISSUE WAS EXAMINED AFRESH AND THE RELEVANT ASSESSMENT/PENALTY FOLDERS WERE CALLED BY HIM FOR EXAMINATION. ACCORDING TO L EARNED AUTHORIZED REPRESENTATIVE NO SUCH STATEMENTS WERE F OUND IN THE RECORDS THOUGH THE THEN ACIT CIRCLE-2, JALGAON ON P HONE REITERATED THE FACT OF RECORDING THE STATEMENTS OF TWO CREDITORS 5 VIZ. SHRI S.C. JAIN AND SHRI S.K. BAMB. HOWEVER, I N SET-ASIDE PROCEEDINGS, THE ISSUE OF PENALTY WAS EXAMINED AFRE SH. THE ASSESSING OFFICER WAS ONLY DIRECTED TO EXAMINE THE CREDITORS AND SUBMIT A REPORT. THE ASSESSING OFFICER VIDE LETTER DATED 04.10.2012 HAD FURNISHED A REPORT ENCLOSING THEREWI TH STATEMENTS OF SHRI S.C. JAIN AND SHRI S.K. BAMB REC ORDED ON OATH U/S.131 OF THE ACT. THE CIT(A) HAVING GONE TH ROUGH THE SAME INCLUDING ASSESSMENT FOLDER, PENALTY ORDER DAT ED 26.07.2010 AND ASSESSMENT ORDER DATED 30.10.2007 WI THOUT COMMENTING ON THE STATEMENTS OF THE ABOVE PERSONS, OBSERVED THAT THE ASSESSING OFFICER HAS ESTABLISHED A REASON ABLE DOUBT THAT THESE PERSONS DID NOT UNDERTAKE ANY CONSTRUCTI ON RELATED JOB WORK FOR THE ASSESSEE. BOTH THESE PERSONS COUL D NOT FURNISH ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THAT ANY J OB WORK WAS UNDERTAKEN BY THEM FOR WHICH PAYMENT OF 28 LACS WAS SHOWN TO HAVE BEEN MADE BY THE ASSESSEE. ACCORDING TO CI T(A), BOTH THESE PERSONS DO NOT HAVE ANY RECORD OF RECEIPT OF PAYMENTS SHOWN TO HAVE BEEN MADE BY THE ASSESSEE, DETAILS OF THE WORK STATED TO HAVE BEEN UNDERTAKEN FOR THE ASSESSEE, EX PENSES INCURRED IN THE JOB WORK, ETC. ACCORDING TO CIT(A) , RECORD OF RECEIPT OF PAYMENTS HAVE BEEN MADE BY ASSESSEE. 6. TAKING ALL FACTS AND CIRCUMSTANCES INTO CONSIDER ATION, THE CIT(A) OBSERVED THAT THEIR STATEMENTS CONFIRMING HA VING WORKED AS CONTRACTOR WITHOUT ANY EVIDENCE HAS NO FORCE. T HE ORIGINAL PENALTY WAS LEVIED ON THE PRESUMPTION THAT THE STAT EMENT OF BOTH CREDITORS WAS RECORDED, WHEREIN, THEY HAVE DENIED T HE AMOUNT OF CREDIT APPEARING IN THEIR ACCOUNTS. SO MOOT QUESTI ON WAS WHETHER THEY HAVE DENIED TRANSACTION WITH ASSESSEE OR NOT. BUT, IN SET-ASIDE PROCEEDINGS, THE CIT(A) HAS GONE ON DI FFERENT TRACK I.E. WHETHER THEY HAVE CARRIED OUT ANY JOB OR NOT. THIS WILL NOT HELP REVENUE TO JUSTIFY AND PROTECT ITS EARLIER PEN ALTY ORDER CLAIMED TO BE MADE ON THE BASIS OF DENIAL OF ABOVE TWO PERSONS. 6 NOWHERE, ABOVE TWO PERSONS WERE DENIED THE TRANSACT ION AS CLAIMED BY REVENUE. EVEN IF THEY ARE NOT ABLE TO S UBSTANTIATE THEIR RECEIPT BY COGENT REASONING, IT WILL NOT BE J USTIFIED ON THE PART OF REVENUE AUTHORITIES TO SUSTAIN THE PENALTY BY DEVELOPING THE CASE OVER AND ABOVE WHAT WAS DONE BY ASSESSING OFFICER IN ORIGINAL PENALTY PROCEEDINGS, IS NOT JUSTIFIED. TH E CIT(A) HAS TO BE IN FOUR CORNERS OF DIRECTIONS OF ITAT IN SET-ASI DE PROCEEDINGS. LIMITED QUESTION REFERRED TO CIT(A) WAS TO ASCERTAI N WHETHER THE ABOVE TWO PERSONS HAVE DENIED THE AMOUNT OF CREDIT APPEARING IN THEIR ACCOUNTS OR NOT BUT CIT(A) HAS GONE ON DIFFER ENT FOOTING WHICH IS NOT JUSTIFIED. UNDER THE FACTS AND CIRCUM STANCES, ACCORDING TO US, IT IS NOT A FIT CASE FOR LEVYING O F THE PENALTY IN QUESTION AND THE SAME IS DIRECTED TO BE DELETED. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 20 TH OF MARCH, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 20 TH MARCH, 2014 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-II, NASHIK 4) THE CIT-II, NASHIK 5) THE DR, B BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE //FIT FOR PUBLICATION//